Business Directories

ME super-rich's wealth poised to hit $3.4 trillion

Manama, June 25, 2008

The total value of super-rich or high-net worth individuals (HNWI) in the Middle East region is poised to grow from BD642 billion ($1.7 trillion) last year to BD1.285 trillion ($3.4 trillion) by 2012, according to a global study.

The forecast amounts to a compound annual growth rate of 15.3 per cent, almost double the global growth rate of 7.7 per cent, states the 2008 World Wealth Report.

The report was unveiled in Bahrain at a Press conference at the Diplomat Radisson SAS Hotel, Residence and Spa on Tuesday. It was launched simultaneously for the first time in 21 other countries worldwide.

Middle East also boasted the fastest growth of HNWI individuals, at 15.6 per cent last year compared to 2006, the report said.

It has outstripped the emerging markets of the Asian-Pacific at 8.7 per cent, Latin America at 12.2 per cent and Africa at 10 per cent, as well as Europe and North America. The number of HNWIs globally reached 10.1 million last year, an increase of 6 per cent from 2006.

Anyone in the Middle East lucky enough to have assets worth more than $1 million (BD378,000) can expect to see their wealth double in five years. The region's rich are about to get even richer, the report added.

The report covers 71 nations accounting for more than 98 per cent of global gross national income, as well as 99 per cent of stock market capitalisation.

Bahrain did not feature in the 36-page document and the only Gulf-specific figures related to the UAE and Saudi Arabia.

But officials said as the report extended into new markets, Bahrain was likely to be included in future.

The report, a product of global wealth firm Merrill Lynch and consulting, technology and US-based outsourcing services company Capgemini, does not go into details about the distribution of wealth or touch on the gap between the rich and the poor.

Merrill Lynch resident director for the Middle East, Jonty Crosse, said one key finding was that HNWIs in the Middle East sought refuge in safer, more traditional investment vehicles due to market uncertainties.

He said this meant domestic markets gained strong favour, as investors across all regions await further developments in global markets.

The report also found that luxury collectables among HNWIs in the Middle East such as cars, boats and jets accounted for 16 per cent of the so-called 'passion dollars' they spent.

This was followed closely by jewellery, gems and watches (15 per cent); luxury consumables (14 per cent); and experimental travel (13 per cent).

Other items on the wish-list of HNWIs were collectables such as coins and antiques, as well as investments in sporting teams.

'The increase in the number of private jets probably demonstrates that people are extremely busy around the GCC, the Middle East and the world and they want the flexibility of travel whenever they want to,' said Crosse.

Another key finding of the report was that the level of investment in green technologies and alternative energy sources in the Middle East ranks alongside other parts of the world.

It found the number of HNWIs willing to put money into the industry was 20 per cent and 21 per cent for ultra high net worth individuals (UNWIs), people with assets of BD11.3 million ($30 million).

Crosse said the report's findings showed that those who targeted the emerging markets gained the highest returns on their investment, but was unable to estimate the impact of rising inflation in the Gulf.

'It will be interesting to see what the figures are for next year,' he said. 'Things have moved so quickly in the last nine months, it has been mindboggling.'-TradeArabia News Service